Basis

Basis (bp) is the difference between the current cash price and the futures price of the same asset - commodity. A basis point is equal to one-hundredth of one per cent, or 0.01%. The basis is affected by the costs of holding the asset versus contracting to buy it for later delivery (the futures contract). The basis is also affected by other influences as well, such as unusual situations in demand or supply. Usually, the price of the nearby futures contract month is generally used to calculate the basis.